Can Norway save us from the energy crisis?

Russia's war in Ukraine has left Europe exposed.

(Photo by Krisztian Bocsi/Bloomberg via Getty Images)

How harsh will Europe’s energy crisis be this winter? That’s the question dominating the continent’s politics this week following Russia’s decision on 2 September to cut flows of natural gas to Germany via the Nord Stream 1 pipeline. For weeks deliveries had already been running at 20 per cent of capacity but they were severed in the wake of a decision by the G7 to impose a price cap on Russian oil last week.

Gazprom, the state-owned Russian energy giant, initially blamed the pipeline’s shutdown on an oil leak at a gas turbine in a compressor station. Yet on 5 September, Vladimir Putin’s spokesman, Dmitry Peskov, said that Nord Stream gas supplies would not resume until Western sanctions on Russia over the war in Ukraine are lifted.

European officials have, in recent weeks, been emphasising that the EU is prepared for a shutdown of deliveries, which analysts have said was the continent’s base scenario for weeks now. They point to the levels of gas in storage across the continent, which have been steadily rising over the past few months and now stand at around 80 per cent EU-wide. In addition, Brussels had already agreed a plan for all member states to cut consumption of gas by 15 per cent in July.

“We are well prepared to resist Russia’s extreme use of the gas weapon,” the EU economy commissioner, Paolo Gentiloni, told reporters this weekend.

Still, the defiant rhetoric does not quite match reality. For one, the gas in storage accounts for about 25 to 30 per cent of gas consumed during a typical winter, according to the European Commission – enough to dent the impact of a shut off of deliveries from Russia but not negate it.

Alternative sources of supply, notably shipments of liquified natural gas (LNG) from sources such as the US, are also helping to compensate but not at the same levels, as infrastructure for both the export and import of LNG is lacking. After the EU’s decades of constructing energy policy largely oriented towards imports from Russia, the existing infrastructure cannot easily be repurposed to serve more reliable suppliers.

Moreover, the simple truth is that the price of gas is spiking because there is less energy going around in the world in the wake of Russia’s invasion of Ukraine, a problem to which Europe is particularly exposed. Other factors include maintenance problems at French nuclear power plants which are resulting in lower electricity generation. Preparation can go some way towards limiting the impact of a drastic fall in supply severely affecting the world’s net importers of energy, but it cannot negate it.

More could be done. Norway, for instance, is currently the EU’s second-largest supplier of gas. It has been profiting from the prices of the energy source, which are far higher than the cost of extraction and export. As a European country committed to the freedom and democracy the entire continent is backing Ukraine in its fight for, Oslo should consider selling its allies gas at below-market rates while the war continues.

As a result of the supply crunch, analysts and officials believe Europe is likely to face energy shortages this winter. Their extent is still highly uncertain, depending on a range of factors, including just how cold the coming winter will be. The risk of electricity blackouts and even “gasouts” in the coming months has risen since last week. Without an intervention of some kind, Europe faces a turbulent season ahead.